DEBT COLLECTION CLINIC TRAINING

1. DEBT COLLECTION CLINIC TRAINING

2. The default rate in debt collection lawsuits is estimated to be 90%. 98-99% of consumers are unrepresented in debt collection lawsuits.

3. In Massachusetts, 60% of the civil docket is debt collection.

4. This rises to 85% in the Boston Municipal Court.

5. Structure of the "Attorney for the Day" Program Your role: • Fact investigation • Negotiation Debriefing

6. TAB 1 SCHEDULE OVERVIEW Intake Document Review Hearing (if needed) Negotiation Evaluation Debriefing

7. 1. THE INTAKE PROCESS

8. The Intake Process: Overview • Four documents are key to successful intake TAB 2 TAB 3 TAB 5 TAB 4 Notice of Small Claims Intake Form L.A.R. Retainer Document Review Hearing (if needed) Intake Evaluation Negotiation Debriefing

9. The Intake Process: Key Takeaways • Thorough intake is vital to proper representation. • Your clients will be unfamiliar with the court system and are nervous. Help to put them at ease early in the process. • Have questions? Talk to the lead attorney! Document Review Hearing (if needed) Intake Evaluation Negotiation Debriefing

10. ? ? ? ? ? 2. EVALUATION

11. Evaluation: The Interview It is critical to ask open-ended questions. Why are you here today? Tell me what happened with this credit card? What is your current address? What was your address when you had this card? Have you ever experienced identity theft? Had your wallet/purse stolen? Do you owe this debt? Document Review Hearing (if needed) Evaluation Negotiation Debriefing Intake

12. Yes No Evaluation: Debt in Dispute? Probe for 3 scenarios Continue to docs, but probe "This balance doesn't look right." Why do you say that? What was your credit limit? Breakdown principal, interest, and fees with faciliator. This is all to determine whether there are defenses beyond assignment. "This is not my card." How do you know? Have you experienced identity theft? Do you know someone who could have gotten your personal information? "I don't recognize/remember this card." Did you have a card from this bank or brand? Have you had multiple credit cards in the past? Go through charges, see if any are recognized. Check address on statements. Document Review Hearing (if needed) Evaluation Negotiation Debriefing Intake

13. Evaluation: Settlement Feasibility All NO = Judgment Proof Any YES = Talk to Lead Attorney • This information will help us advise a client on financial exposure. Let them know that you need it to help negotiate the best settlement, and to know what the risks are if we lose. • Income other than public benefits/government assistance? • Do you own a house? * If so, how much is it worth? What is outstanding balance on mortgage? • Do you own a car? * If so, how much is it worth? What is the outstanding balance on the loan? • Do you have significant assets in the bank or expect to get any money in the near future? * Savings, tax refund, inheritance, gifts, etc. Document Review Hearing (if needed) Evaluation Negotiation Debriefing Intake

14. 3. DOCUMENT REVIEW

15. Document Review: Overview TAB 7 TAB 9 TAB 5 TAB 11 • Seven documents of note for the review. Bill of Sale Accounts Schedule Notice of Small Claims TAB 8 TAB 10 TAB 6 Billing Statements Creditor's Affidavit Data Sheet Plaintiff's Affidavit Document Review Hearing (if needed) Negotiation Debriefing Intake Evaluation

16. The Collector Must Prove Ownership D. James Greiner, William Henry Bloomberg Professor of Law Harvard Law School Document Review Hearing (if needed) Negotiation Debriefing Intake Evaluation

17. TAB 6 Plaintiff's Affidavit Document Review: Plaintiff's Affidavit Create a "chain of title." WEBBANK → Bluestem Brands, Inc. → Santander Consumer U.S.A → Midland Funding LLC Account for any additional entities. (Here, Midland Credit Management and Fingerhut.) Be aware of who is making representations in the documents and how they are getting their information. Here, it is a servicer of the plaintiff. (They are self-interested and lack personal knowledge!) Make note of dates. Affidavit should be dated after the bills of sale. Dates of sale should also match bills of sale. Document Review Hearing (if needed) Negotiation Debriefing Intake Evaluation

18. TAB 7 Bill of Sale Document Review: Bill of Sale Look for references to documents, agreements, schedules, etc. that are not attached. Make sure the dates here match the dates in the Plaintiff's Affidavit. Check against your chain of title. Here, where did Fingerhut, Santander, and Midland go? Document Review Hearing (if needed) Negotiation Debriefing Intake Evaluation

19. TAB 8 Document Review: Creditor's Affidavit Creditor's Affidavit What matters are the assignments. Check for inconsistencies with dates or anything that contradicts your chain of title. Otherwise, affidavits have no probative value. Document Review Hearing (if needed) Negotiation Debriefing Intake Evaluation

20. TAB 9 Accounts Schedule Document Review: Accounts Schedule The schedules are supposed to list which accounts are being sold by the bills of sale. In almost every case, you will see one of these two scenarios: The schedules are not included in the plaintiff's file. The schedules are attached, but any information identifying your client is redacted or is missing. In both scenarios, it is impossible to tell if your client's account was sold by the bills of sale. Document Review Hearing (if needed) Negotiation Debriefing Intake Evaluation

21. TAB 10 Data Sheet Document Review: Data Sheet Check to see if your client's personal information is correct. Name, social security number, address, date of birth, etc. Check if the account number on the data sheet matches the one on the statements. Check if there is anything on the data sheet that talks about where the information in it comes from; if so, note who makes these representations. Document Review Hearing (if needed) Negotiation Debriefing Intake Evaluation

22. Billing Statements TAB 11 Document Review: Billing Statements Check the name on the statement against your chain of title. Ask the client if they recognize the charges; check for peculiar ones. Also note how much of the outstanding balance is made up of fees and interest. Make sure that the address on the statements was where your client lived at the time the statement was sent. Note any missing statements. Document Review Hearing (if needed) Negotiation Debriefing Intake Evaluation

23. 4. SETTLEMENT NEGOTIATION

24. Settlement Negotiation Before speaking to opposing counsel, we need to know what the client can afford to pay. In particular, ask the client three questions: What is a monthly payment that you could make toward this debt that wouldn't cause you to fall behind on your other bills and expenses? If you had to come up with a lump sum of money within three months, what is the most you could reasonably come up with? How would you come up with it? Are you willing to have a judgment appear on your credit report? Hearing (if needed) Document Review Negotiation Debriefing Intake Evaluation

25. Settlement Negotiation: Worst Case Scenario After this, determine the maximum amount a client could be ordered to pay by the court. (Lead attorney will assist if necessary.) This is called an "exemptions analysis." A client will never be ordered to pay more than $550, or 15% of their gross wages, per week, whichever is greater. In particular, remember that all public benefits are exempt income. If the client has assets listed on their intake form, talk to the GBLS lead attorney about whether those assets are exempt. Hearing (if needed) Document Review Negotiation Debriefing Intake Evaluation

26. Settlement Negotiation: What Motivates Plaintiffs Remember that the debt buyer bought the debt for pennies on the dollar. Larger, quicker payments are enticing to debt buyers and will often induce them to write off more of a balance. Even better for the debt buyers are payments that can be made the same day. Hearing (if needed) Document Review Negotiation Debriefing Intake Evaluation

27. Settlement: Judgments vs. Private Agreements Debt buyers often want to make an agreement where judgment enters. "Private Agreements" are better for consumers and their credit reports. The lead attorney has templates available for private agreements. If the debt buyer insists on a judgment, the lead attorney will help you come up with language that protects the client. Always obtain a copy of any agreement for the client and for our records. Hearing (if needed) Document Review Negotiation Debriefing Intake Evaluation

28. Settlement Negotiation: Finality Do not underestimate the value of finality for our clients. A court day is generally a day the client is missing work and therefore not getting paid. Leaving things unresolved causes clients anxiety. Hearing (if needed) Document Review Negotiation Debriefing Intake Evaluation

29. Matt Brooks Equal Justice Works Fellow Fidelity Investments & Mintz Levin Greater Boston Legal Services mbrooks@gbls.org